US technology firm Cirrus Logic has made a formal bid for Wolfson Microelectronics in a deal valuing the Edinburgh company at £278 million.

Texas-based Cirrus Logic, which develops high-precision, analog and mixed-signal integrated circuits for a wide range of electronics, has tabled a bid priced at £2.35 a share for Wolfson – a premium of 75.4 per cent on the closing price on April 28.

Shares in Wolfson, which makes audio chips for consumer electronics, leapt 72 per cent on the market opening on Tuesday, rising from a close price on Monday of 134 pence to 230.5 pence in early trading on Tuesday.

Wolfson's market cap rose in Tuesday trading to £269.7 million.

Cirrus Logic said it plans to fund the deal with existing cash and $225 million (£133.6 million) in debt funding.

Subject to shareholder and regulatory approval, both parties expect the deal to complete in the second half of 2014.

Wolfson chairman, Michael Ruettger, said: “The Board of Wolfson believes that this is an attractive offer for Wolfson shareholders.

“We believe this reflects the hard work that Mike Hickey and his team have put into building Wolfson as a leader in the supply of high performance Audio Hubs and MEMS microphones to the consumer electronics market.

“Together with Cirrus Logic, we believe this will create a powerful platform for future growth, above and beyond our standalone potential.”

Jason Rhode, president and chief executive of Cirrus Logic, said: “Wolfson has a rich history of audio innovation, a broad catalog of audio products and a first class customer list.

“This acquisition strengthens Cirrus Logic’s core business as a leader in audio signal processing components, enhances our ability to differentiate our products with software, and adds new product categories such as MEMS microphones to our portfolio.”

Wolfson has also today reported a first-quarter trading update showing a 40 per cent dip in revenues, down from £28.6 million in Q1 of 2013 to £17.1 million for the three months to March 30, 2014.

The company said operating losses for the quarter were £3.4 million against £3.7 million reported for Q1 in 2013, which had included an exceptional charge.

Wolfson said its overheads reduced 18 per cent compared with the same period a year ago, down to £10.8 million from £13.1 million.

Last October Wolfson announced it would cut 10 per cent of its global workforce of around 500 – including 280 at its Edinburgh headquarters – after booking slower third-quarter sales.

The third quarter update had warned sales would be slower with "slippage of some key programmes" gong into 2014, and would look to cut overhead costs by around £6.2 million a year, effective from the first quarter of 2014.

Wolfson said last year, ongoing sales would be impacted by customer product cancellations, which analysts had linked to loss of orders from Blackberry maker Research in Motion.

In a first-quarter update posted today, Wolfson said: “Revenue continued to be impacted, as expected, by customer inventory overhangs caused by last year’s faster-than-anticipated transition from 3G to 4G (LTE) smartphones.”

The company also notes a strong rise in gross margins on last year - up from 40.3 per cent in Q1 of 2013 to 47.1 per cent in Q1 of 2014 – which was down to “higher value-added Audio Hubs starting to come to market”.